Road Pricing 101 and Public Acceptance Issues · 1 Road Pricing 101 and Public Acceptance Issues Robin Lindsey Transport Futures 2009: Road Pricing & Public Acceptance November 12,

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Road Pricing 101 andPublic Acceptance Issues

Robin Lindsey

Transport Futures 2009: Road Pricing & Public Acceptance

November 12, 2009

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OutlineOutline

1. Transportation problems in Canada

2. The case for road pricing

3. Forms of road pricing

4. Public attitudes toward road pricing

(general, worldwide)

5. Public attitudes toward road pricing in

Canada

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a) Inadequate and inequitable funding of

transportation

b) Traffic congestion and other external

costs of road travel

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1a) Means of funding transportation

Funding roads in OntarioFederal & provincial sources

Taxes: Fuel, income, salesFunds (e.g. Building Canada; Gateway)Stimulus packagesTolls

Municipal sourcesProperty taxes (major)Development charges (minor)Parking fees, license fees

Most revenue sources are not earmarkedSources: Ontario Good Roads Association, Harry Kitchen

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1a) Inadequate funding

• Declining cost recovery for roads (71%, 2007-08)

• Large transit deficits• Major investment plans for roads and transit

(esp. Montréal, Toronto & Vancouver)

• Federal infrastructure funds are temporary

• Fuel tax revenues vulnerable to increasing vehicle fuel economy, alternative-fuel vehicles & difficulty in raising fuel taxes

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1a) Inequitable funding

• Most revenue sources do not respect the user pays (beneficiary) principle

• Traditional revenue sources may be more regressive than user charges

Example: cost burden of tolls on State Route 91 vs. local option transportation sales tax (Schweitzer and Taylor, 2009)

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1b) Traffic congestion

Transport Canada (2006a) study

Quantified costs of recurrent traffic congestion.

1. Travel delay (90%)2. Additional fuel consumption (7%)3. Additional greenhouse gas emissions (3%)

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Urban Area Annual cost (million, $2002)

Annual cost per capita

Toronto $1,267 $271

Montréal $854 $249

Vancouver $517 $260

Ottawa-Gatineau (all) $61 $58

Calgary $112 $118

Edmonton $62 $66

Québec City $52 $77

Winnipeg $77 $115

Hamilton (all) $11 $17

Total, all urban areas $3,015

Transport Canada (2006a): recurrent congestion

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Transport Canada (2006b): add nonrecurrent congestion

Urban Area Recurrent only

(million, $2002)

Recurrent & nonrecurrent

(million, $2000)

Toronto $1,267 $2,474

Montréal $854 $1,390

Vancouver $517 $927

Ottawa-Gatineau (all) $61 $172

Calgary $112 $211

Edmonton $62 $116

Québec City $52 $104

Winnipeg $77 $169

Hamilton (all) $11 $33

Total, all urban areas $3,015 $5,580

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Estimates exclude:freight transportoff-peak congestioncongestion-related costs of accidents, noise,

local emissions, road damage & behavioral adaptations

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OECD study conclusions (Nov. 2009)

Cost of traffic congestion in Toronto: $3.3 billion in lost productivity. [Methodology?]

In 2005 federal spending in Canada on transportation as share of total spending was lowest in the OECD.

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Canada

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• As additional revenue source, satisfying user pays principle

• To relieve congestion

• To price emissions and other external costs of transport

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Tolled facilities in CanadaNew Brunswick Confederation Bridge (to Prince Edward Island ) Bridge Electronic Saint John Harbour Bridge Bridge Electronic Nova Scotia A. Murray MacKay Bridge Bridge Angus L. Macdonald Bridge Bridge Cobequid Pass/Highway 104 Toll Highway Road Electronic Ontario Highway 407 Road Electronic, Variable

Quantity discounts Ambassador Bridge Bridge Electronic, Quantity discounts Blue Water Bridge Bridge Detroit-Windsor Tunnel Tunnel Lewiston-Queenston Bridge Bridge Ogdensburg-Prescott Bridge Bridge Quantity discounts Peace Bridge Bridge Electronic Rainbow Bridge Bridge Sault Ste. Marie International Bridge Bridge Seaway International Bridge, North Channel Span Bridge Seaway International Bridge, South Channel Span Bridge Thousand Islands Bridge System Bridge Quantity discounts Whirlpool Rapids Bridge Bridge British Columbia Golden Ears Bridge Bridge Electronic Coquihalla Highway Ended in 2008 Road

TOTALS Bridges: 16 Roads: 2 Tunnel: 1

Electronic: 7 Variable: 1 Discounts: 4

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Limitations of road pricing in Canada

Only 199 km tolledCompare: Over 8,500 km. of toll roads in the US Toll revenues of $483 million (2008) = 0.36% of total

personal expenditures on road travel

Use of electronic toll collection limitedTolls are not congestion charges

Quantity discountsFlat except on Highway 407Highway 407 privately owned and operated

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Type of scheme Examples Facility-based

High occupancy toll (HOT) lanes Express toll lanes Highways

Interstate 15 State Route 91 Highway 407

Area-based Cordons Zones

Norwegian cities; Stockholm London

Road networks Singapore: some expressways, arterials Heavy Goods Vehicles: Switzerland,

Austria, Germany

Regional US pilot tests: Oregon, Puget Sound, U. of

Iowa

National Britain (2004) The Netherlands: Dutch Mobility Plan US: Commissions (2008, 2009)

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Degree of time variation

Degree of time variation Examples

Flat Most roads

Variable (scheduled) State Route 91; Highway 407

London; Stockholm

Singapore

Dynamic (responsive) I-15; I-394

Cambridge UK proposal (1990s)

Anticipatory (predictive) Academic research

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Technology requirements

Road usage measurement

Data communication for billing purposes

Calculation of bills

Enforcement

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Technology choices

Type of system Technologies used

Conventional Toll booths, payment manually

Electronic Toll Collection

1. Roadside-only Automatic Number Plate Recognition

2. Tag and beacon Short-range microwave On-board in-vehicle units/smartcards or monthly billing

3. In vehicle-only Cellular networks (GSM) Global Navigation Satellite Systems (GPS, Galileo)

Enforcement Automatic Number Plate Recognition Mobile monitors

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Traditional objections to road pricing [1]Traditional objections to road pricing [1]

1. Paying for something that was free

Canadian roads traditionally provided publicly without direct user charges.

2. Double taxationMost road-pricing schemes not revenue neutral.

The Netherlands intends to modify its current road tax system.

UK has considered lowering fuel taxes if a national scheme is introduced.

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3. InequitableWith respect to income

Higher-income groups more likely to gain because willing to pay more for travel time savings.

Counters: Depends on travel volume, mode choice, use of toll revenues.

With respect to locationLocation relative to tolled facilities

Boundaries of area-based schemes

Toll differentiation on road networks

Tolling of residential streets, private roads

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4. System complexity

People dislike complex price structures

This militates against varying tolls frequently by time of day, multiple charging points, discounts ...

Complex schemes that failed:

• Hong Kong proposals (1985, mid-1990s)• Edinburgh double cordon (2005)• Manchester double cordon (2008)• New York City area-based scheme (2008)

Complex schemes that succeeded:• HOT lanes in US with dynamic tolls• Electronic road-pricing in Singapore

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5. Invasion of privacy

Largely addressed by anonymous electronic tolling technology

Concern with satellite-based systems

6. Loss of retail business

Retailers generally oppose road pricing initially.

But:

Studies indicate effects are modest

Any lost business from drivers could be offset by gains from shoppers using other modes.

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Additional objection to road pricing [5]Additional objection to road pricing [5]

7. Other revenue sources cheaper to collect

But:Other sources distort incentives (work, location, …)

Other sources are inequitable

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Opposition to UK national schemeOpposition to UK national scheme

1. “The idea of tracking every vehicle at all times is sinister and wrong.”

2. “Road pricing is already here with the high level of taxation on fuel. The more you travel - the more tax you pay.”

3. “It will be an unfair tax on those who live apart from families and poorer people who will not be able to afford the high monthly costs.”

4. “Please Mr Blair - forget about road pricing and concentrate on improving our roads to reduce congestion.”

1. Invasion of privacy2. Double taxation3. Inequitable4. Views improving roads as an alternative to tolls

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Recent US survey evidence [1]Recent US survey evidence [1]

Survey of 110 US public opinion studies of pricing

Source: Zmud (2008, NuStats)

Majority support Majority opposition

Overall 56% 31%

Type of respondent

Potential users 74% 15%

Registered voters 71% 24%

General public 42% 42%

Wording of question

Additional information provided 94%

None 48%

Context

Specific project 62%

General opinion 48%

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Public support generally higher for:

Specific projects with tangible benefits

Revenues earmarked for highways or public transitNot to special interest groups such as investors

Simple projectsPrefer toll roads to mileage fees

Tolls preferred to taxes or reduced service


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Attitudes before and afterAttitudes before and after

Support increases after tolling begins

Norway

London

Stockholm

U.S. HOT lanes …

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Canada

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Historic opposition to tolls [1]

Fredericton-Moncton highway project

In 1998, New Brunswick government entered a PPP (design, finance, build, operate & maintain, 25 years).

Toll to be imposed on pre-existing toll-free section.

Public resistance to toll contributed to downfall of government.

New government revised contract to compensate contractor with shadow tolls.

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Historic opposition to tolls [2]

Coquihalla Highway

Operated as public toll road 1986-2008.

In 2003, BC government proposed privatization on 55-year lease.

Car toll expected to jump from $10 to $13, and rise over time.

Massive opposition.

Government backed down.

Car toll remained at $10 until tolling ended.

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Public attitudes in Québec

Preferred type of user charge

Source: Léger Marketing (2007)

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Summary: Public attitudes in Canada

Tolls more acceptable:

On new capacity (especially if not otherwise built).

If a reasonable toll-free alternative exists.

If revenues earmarked to the tolled facility.

If toll increases are moderate.

Overall: Attitudes vary across governments,

other institutions and the public.

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References

Kitchen, H. 2008. “Financing Public Transit and Transportation in the Greater Toronto Area and Hamilton: Future Initiatives”, January, The Residential and Civil Construction Alliance of Ontario (www.infracoalition.ca).

Léger Marketing. 2007. “Opinion of Quebeckers on road network funding.” Montreal Economic Institute Research Report September 2007, MEI-Journal de Montréal-Léger Marketing Opinion Poll, September 2007 (www.iedm.org/uploaded/pdf/sondage0907_en.pdf).

Lindsey, Robin. 2006. “Do Economists Reach a Conclusion on Highway Pricing?: The Intellectual History of an Idea.” Econ Journal Watch. 3(2): 292-379.

Lindsey, Robin. 2007. “Congestion Relief: Assessing the Case for Road Tolls in Canada.” C.D. Howe Institute Commentary 248.

Lindsey, R. 2008. “Prospects for Urban Road Pricing in Canada.” G. Burtlessand J. Rothenberg Pack (eds.), Brookings Wharton Papers on Urban Affairs: 2008, 235-293.

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References

Mylvaganam, C. and Borins, S. 2004. If you Build it ... Business, Government and Ontario’s Electronic Toll Highway, University of Toronto Centre for Public Management, Toronto: University of Toronto Press.

Schade, J. and Schlag, B. eds. 2003. Acceptability of Transport Pricing Strategies, Elsevier, Amsterdam.

Schweitzer, L. and B.D. Taylor. 2009, “Just pricing: the distributional effects of congestion pricing and sales taxes”, Transportation, DOI 10.1007/s11116-008-9165-9.

Transport Canada. 2006a. The Cost of Urban Congestion in Canada, Ottawa: Transport Canada, Environmental Affairs. March 22 (http://www.tc.gc.ca/programs/Environment/EconomicAnalysis/docs/summary.pdf)

Transport Canada. 2006b. Costs of Non-Recurrent Congestion in Canada Final Report, Transport Canada Economic Analysis TP 14664E, December 11 (http://www.tc.gc.ca/pol/en/aca/fci/road/menu.htm)

Zmud, J. 2008. “The public supports pricing If … A synthesis of public opinion studies on tolling and road pricing.” International Bridge, Tunnel and Turnpike Association, Tollways, Winter, 28-39 (http://www.ibtta.org/files/PDFs/win08_Zmud.pdf).

Documents

Road Pricing 101 and Public Acceptance Issues · 1 Road Pricing 101 and Public Acceptance Issues Robin Lindsey Transport Futures 2009: Road Pricing & Public Acceptance November 12,